Samsung Heir Sentenced to Prison

(ATR) The heir apparent to Olympic sponsor Samsung is found guilty of bribery.

A court in Seoul sentenced Samsung vice chair Jay Lee to five years in prison for bribery after a trial that began soon after his arrest in February.

He was charged in connection with the scandal that toppled the government of former president of Korea Geun-hye Park. She was impeached last year and is still on trial on an array of corruption charges.

Lee and four other company executives were convicted of supplying more than $6 million to Park through a close friend of the president who’s already in prison for her crimes.

The financial dealings apparently have no connection to the Samsung Olympic sponsorship. The company has been a worldwide sponsor since 1998 in the mobile phone category.

But that sponsorship expires in 2020 and negotiations presumably would be underway soon on whether Samsung wishes to renew. Lee has led the company’s Olympic planning so his loss to a prison sentence could have some effect on Samsung’s interest in the Olympic Games.

With the first winter Olympics coming to South Korea in just five months, Samsung has been remarkably low-key in its promotion of these hometown Games. The profile will rise in October when the Olympic Torch Relay gets underway. Samsung is one of the three sponsors of the hundred day event.

Attorneys for Samsung say they will be appealing the sentence, but Lee remains in custody as he has since his arrest.

While the scandal has rocked the leadership of Samsung, the company’s balance sheet is in good shape with record sales and earnings from its electronics division.

Lee, 49, had taken over the leadership of the Samsung Group from his father Kun Hee Lee, 76, who still holds the position of chairman. The elder Lee has been in a coma for three years following a heart attack. His continuing illness and inability to travel have led his family to inform the IOC that Lee will not stand for reelection to his IOC membership next month at the session in Lima, Peru. Lee has been an IOC member since 1996.

Kun Hee Lee has faced his own legal problems. In 2008 he was sentenced to a suspended three-year prison term for financial crimes involving Samsung. During that time Lee’s IOC membership was suspended. Lee was eventually pardoned by then President Myung Bak Lee.

A lawyer for Samsung says the company will not accept the guilty verdict handed down today and that an appeal will follow. However, Lee will have to serve his appeal in jail, according to local reports. South Korean law prevents sentences over three years to be suspended.

Korean President Jae In Moon, who took office in May vowing to curb the influence of South Korean companies such as Samsung in the affairs of the national government, says he welcomes the verdict.

"The case should serve as momentum for the nation to cut cronyism ties between politics and business," says a statement from his office.

Judge Jin Dong Kim says the Korean public has the right to demand accountability from business and government.

"The essence of this case is the unethical bond between politics and money. The people expect that the power of a president, the top authority under the Constitution, will be used to serve all people and that big businesses act with social responsibility, through legal economic activities," the judge said in his ruling.

"Through this case the people have come to question the fairness and honesty of the president and have come to distrust the ethical values of Samsung, the largest conglomerate."

Written by Ed Hula.